Haiti 2.

0: Driving Haiti’s Economic Engine in the 21st Century

A Reflection on the Conference: Issues, Misconceptions and Recommendations

Introduction

On January 6, 2011, World Vision Haiti and Harvard Business School (HBS)’s Haiti Immersion
Experience Program (IXP) jointly hosted a conference titled: “Haiti 2.0: Driving Haiti’s
Economic Engine in the 21st Century”. The conference had as its objective to engage Haiti’s
business leaders in a discussion about economic development potential in four sectors: foreign
investment & banking, import/export, tourism and sustainable employment. Experts from
various economic, commercial and government sectors were invited to share their thoughts
following presentations by the HBS students.
This report summarizes the key discussion points that the conference participants touched on. It
has been formatted such that it elaborates on issues, misconceptions and recommendations.
Where relevant, participant quotes have been included.

Issues
Haiti 2.0 participants identified several issues that have led to the current economic situation in
the country. Some of these issues are widely known while others are more subtle, yet potentially
highly valuable to address. The issues have been categorized as historic, economic, social or
political.

Historic

• Embargo: Several participants spoke to the embargo’s lasting effects on the Haitian
economy. From their perspective, this event remains firmly engrained in business
people’s minds because of how deeply it affected local firms. One participant mentioned
distrust in the international market’s (and particularly in the U.S.’s) ability to be counted
on as trade partners.
• ‘Resting on export laurels’: One participant from the export sector discussed Haiti’s
exporting strength in historically strong sectors such as mangos, coffee and sugar. This
same individual also suggested that the country’s reliance on those sectors was
potentially hampering the ability to further develop niche agriculture industries that could
further diversify the economy.
• Lack of support for peasantry: The former Prime Minister described the historic lack of
support for the peasant as the source of the slums crisis facing Port-au-Prince in
particular.

Economic

• Lack of capital to start and grow businesses: One participant stated that both pre- and
post-earthquake, it is incredibly difficult to find equity capital in particular to fund
business ideas. The need for such capital has only been exacerbated following the
earthquake because of the rebuilding (inventory, equipment, factories, etc.) that must take
place.
 • Lack of commercial banking capabilities: Entrepreneurs are hampered by a weak
commercial banking sector in Port-au-Prince and particularly in rural areas.
• Risk aversion: Several participants spoke of risk aversion by local and foreign investors
as a key barrier to economic growth in the country.
• Lack of sustainable foreign investment: While a number of participants spoke of the need
to better equip potential local business leaders, they also spoke of the lack of foreign
investment as being a key driver of continued economic depression.
• Lack of human capital: Very tied to education, some participants discussed the lack of
talented human capital in the country to support businesses. One participant stated that
middle management staff is particularly difficult to find and that training for such type of
employment is missing in the country.

Social

• Lack of ‘respect’ for entrepreneurs / business people: One participant brought up the
cultural issue that faces many young potential business leaders: the lack of respect for
their profession. In fact, this same participant talked of the higher level of respect (and
therefore encouragement from parents and educators) for law, engineering, and medicine
professions. Politicians in the country are partially to blame for this perception as they
also intentionally, argued one participant, side-step the business elite.
• Missing middle class: There was a perception by one participant that the middle class of
Haiti is primarily in the Diaspora, leaving the country fragmented between the rich and
poor. A middle class, he stated, was important to stimulate demand for economic
development.
• Urban flight: The flight of Haitians to urban centers has impacted the agriculture sector
both in terms of workers and in terms of the types of food it should be producing for
Haiti’s own consumption, said one exporter. This social dynamic has not been addressed
by the agriculture sector and is leading to some food shortages and export supply-chain
issues. It also means that cheap, subsidized imports have flooded the country.
• Security risks: Security concerns were particularly discussed with respect to the tourism
sector’s ability to flourish. There was widespread agreement by participants that the
country is safer than it appears to foreigners and that the image that has been portrayed in
the media is damaging the country’s ability to attract tourists.

Political

• Lack of education: One participant in particular passionately argued that the lack of a
formal public education system with consistently high standards in both rural and urban
areas has put the country behind. Today, many parents spend huge portions of their
wealth to send their children to private schools (it is estimated that 90% or more of
Haiti’s schools are private). This continues to polarize the rich and the poor and further
inhibits the potential for that wealth to be used to spur economic development.
• Lack of infrastructure: Several participants across sectors stated the need for a more
developed infrastructure to support economic development. Issues with airports, ports,
roads and public transit systems were all mentioned. In particular, one participant spoke
about the delays his company faces when exporting goods out of the port of Port-au-
Prince. The concentration of port services in the capital also means that many businesses
 are located in and around the capital to avoid transporting goods from far-reaching rural
areas.
• Lack of governance: One of the participants, a lawyer, talked about the lack of
governance particularly around starting a business. He argued that there hasn’t been
much progress with respect to easing the difficulty companies face (lengthy timelines,
required government signatures, etc.) to open a business, despite this being assured in the
international press.

Misconceptions
The international dialogue regarding Haiti is full of statements as to the problems that
prevent economic, social, and political development. During the conference, business leaders
highlighted several of the misconceptions within this dialogue. Resolving these misconceptions
and correcting them may be key to the long term potential of development in Haiti.

Haiti’s development is hindered most by a land titling problem. The owner of a large
domestic bank charged that Haiti’s problems could not be solved by resolving the land titling
issue alone and that there is too much focus on this issue. He suggested that this titling problem
has been around for the last 20 years. Although resolving land titling would be a step in the right
direction there are many other important issues that hamper development in Haiti such as the
lack of foreign capital investment.
Haiti needs social capital investments to spur development. The owner of a large domestic
bank suggested that social capital is not the best way to lead sustainable social and economic
development. Social development needs to be the byproduct of economic development and not
the other way around. Risk capital would enable commercial enterprises and entrepreneurs to
flourish which in the end would lead to long term social development.
The time to start a business has been reduced in Haiti. Although legislation has been past to
reduce the time needed to start a business in Haiti, there are still other issues. According to one
conference participant, “All of this was for nothing because there is no funding entity to help
new business start more quickly.”
Haiti cannot develop a tourism sector because there are security problems. One business
man asked, “How has Haiti not had tourism but Kingston, Jamaica which is one of the most
unsafe cites in the world, has?” The participants suggested that tourists believe Haiti is far more
dangerous than it actually is, “perception is not reality.” They believe that government and
private sector actors could help decrease bad publicity about safety and security issues in the
country.

Haiti cannot compete with other tourist destinations in the Caribbean. Several participants
suggested that Haiti could create a niche experience as many things about Haiti are unique to the
country. They highlighted art, music, history, cuisine, the environment, and the culture as the key
differentiators for Haiti. “We can offer people an out of this world experience.”
Recommendations
Several recommendations for growth and entrepreneurship emerged from our important
discussion. A vocal business leader in the audience said it best: “We have all the ingredients
here in Haiti. We just need a chef to put them all together.” Haiti has been through significant
challenges but its people remain hopeful for the future. Below are a few key recommendations
that were suggested.

Haiti must promote access to risk capital to support local entrepreneurs.

• Haitian businesspeople need domestic and international investors willing to take a risk.
In its current state, Haiti needs risk capital, not social capital.
• A commercial banking sector is needed inside and outside cities to support economic
growth.
• Politics takes center stage before business in Haitian culture. Haitians need to develop
the mental attitude to start businesses and create jobs – e.g. telecom sector (Digicel and
Voila).

Grow the middle class and support domestic job creation.

• Economic development should come before social development. New businesses will
create a stronger, more sustainable tax base to provide better services and infrastructure
for the country.
• Since 1948, the middle class has moved away from the country and become the
international Diaspora. The Haitian business community must train and retain the middle
class.
• Haiti must move from a rent-seeking economy to a productive economy. They must
change the culture to think in terms of equity and ownership, versus pay-for-hire.

Business and government must work together in partnership.

• The government must support the growth of domestic infrastructure to allow other
industries to thrive. A modern airport must be build with runways that sustain
international flights. Hospitals and security (local police) must be improved to support
safety and health of Haitians, visitors and expatriates. The housing industry must be
reconstructed. Haiti must build build at least 50,000 units per year to solve the housing
situation.
• Diaspora bonds could be a solution for investment. Locals and Diaspora want equity.
Diaspora bonds could offer an investment vehicle where they can invest $100,000 -
300,000 and be a part of the growth.
• The exchange rate must fluctuate to promote important export industries. The
agricultural community is hampered by an overvalued exchange rate. Also, people
receiving remittances are losing money due to an overvalued exchange rate.

Haiti should leverage fertile soil, climate and proximity to U.S. to grow agricultural exports
– focusing on mangoes, coffee, and marble

• Haiti has a great climate for agriculture and must support the industry: 60% plains and
30% mountains. An impediment to growth is urban flight.
• Haitians must leverage technology to increase crop yields, leaning on NGOs to support
production and help in post-harvest seasons to prepare farmers and educate them on
innovative farming techniques.
 • Haiti is 1h45 minutes by air and 2 days by boat to Miami, which should support the
growth of the agriculture sector.
• Certain varieties of mango are only grown in Haiti. Farmers and businessmen need
access to roads where mango groves are popular.
• The entire value chain should be improved. Businesspeople and government must invest
in irrigation, tractors, packaging, security and marketing.

Education should be a national priority.

• Haitian children need quality education. Currently people are paying all their wealth to
schools to educate their children. If the government can improve the system, the entire
country will benefit.

Tourism should become first a regional, then a national priority.

After the earthquake over 50 guesthouses sprung up in Port-au-Prince, which showed the
potential for new hotels. However, there are still concerns that Haiti is not ready for tourism.
Many say, in order to attract tourists, Haiti needs to first have an airport, ports, attractions,
hospitals and schools.

• The business community must pursue a hotel chain to enter Haiti (Marriott, Sheraton,
etc.). This will create international credibility.
• Start by segmentation. Each region should build its own stand-alone tourism hub. This
works best in places that can function independently without broad government support.